Factories in dire straits, push workers to the edge
Sri Lanka’s factories are facing tough times and so are its workers with the unemployment rate increasing to 5.02 per cent in June this year.
FTZ Manufacturers Association Chairman Dhammika Fernando told the Business Times that the factories in the zones and outside are facing dire conditions with the increasing cost of production.
Sri Lanka is becoming increasingly uncompetitive when compared with its regional counterparts due to the increased cost of production, he noted, pointing out that this is the constant concern today by most factories.
As a result the crisis has reached unsurmountable proportions and have pushed some out of work and forced them to relocate their factories into other countries in the region and even outside the region like Türkiye (Turkey) where the business prospects are more favourable.
With the continued increase in the rates of water and electricity the factories are finding it hard to survive, it was noted.
Mr. Fernando stated that they have recently taken up these concerns with the Board of Investment as well and particularly the recent hike in electricity.
In fact they have also made further submissions to the Public Utilities Commission of Sri Lanka as well, he noted.
He explained that under these conditions they expect more factory closures by the end of the year.
Sri Lanka’s industrial exports have shown a drop when taking into account the July figures. According to the Central Bank data it indicates that exports earnings have dropped by 12.4 per cent when compared to the same period last year. In July 2023 earnings were at US$1,020 million compared to $1,287 million in 2022.
The earnings for the period January to July have also indicated a drop of 10.3 per cent when compared with the same period last year. Earnings for January to July were at $6,891 million in 2023 and $7,687 million in 2022.
Mr. Fernando noted that while some factories are leaving, others are found to be downsizing with some retrenching but those local factories find it difficult to move out.
He also said that should trade unions demand for an increase in wages it will only drive more factories to the brink of closure and relocation.
Free Trade Zone and General Services Trade Union General Secretary Anton Marcus told the Business Times that it has been reported that about 500,000 have lost jobs of which 300,700 are estimated to be factory workers.
He noted they need to have a discussion with authorities on the closure of the factories but complained the main forum, the National Labour Advisory Council is not meeting up regularly.
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